AUI primed for debt swoop

Australian Unity Investments will use funds freed up by the $35 million sale of Tamworth City Plaza to cut debt and invest in one of its other centres. The AUI retail property fund sold Tamworth mall to Charter Hall Retail REIT last week, slightly below its $36 million book value, as it seeks to reposition its portfolio.

AUI said it had no immediate plans to market other retail assets, despite holding several properties that did not fit its long-term strategy.

“The sale of the Tamworth shopping centre is really us moving with our strategy to redeploy capital across the fund and, in time, reposition the portfolio into metropolitan areas with high population growth," AUI’s head of diversified property funds, Peter Lambden, said .

Remaining properties in the retail fund include two homemaker centres and a Caltex twin services centre on the NSW Central Coast, along with the Waurn Ponds shopping centre in Geelong and North Blackburn Square shopping centre in Melbourne’s east.

Mr Lambden said the fund was not looking to sell or buy any more ­centres at present, although the ­longer-term aim was to invest in neighbourhood centres in growing metropolitan areas.

“It’s a very gradual process of ­turning our assets over in a responsible manner and looking to redeploy ­capital," he said.

AUI completed a review of its retail property portfolio earlier this year. Lenders had been pressuring the fund management business to cut debt in its retail portfolio.

Gearing levels before the sale were around 50 per cent. Mr Lambden said gearing would be maintained at slightly below 50 per cent.

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The sale proceeds would also be used to finance the redevelopment of the Waurn Ponds shopping centre, which is being expanded from 26,700 square metres to 35,000 sq m, at a cost of $50 million to $60 million.